A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

July 28, 2008

26 comments:

I've not seen it yet. Gold bounced from $800 to $1000 and has been mostly @$900 for awhile now.

Although I guess it really just depends on how bad things get. Word is that we've only seen $300B of $1 Trillion in losses, with at least one analyst calling for $2 Trillion in losses.

Basically, it depends on how things play out. I think the only way that gold goes significantly higher is if the dollar goes to $2 and/or we see money market funds "breaking the buck" - which essentially happens when the value of a money market fund falls below $1.

There's a ton of assets backing mutual funds that mostly appear safe at the moment, but if there because even the slightest serious doubt that a few major money market funds might have trouble keeping their value at $1, gold will be flying off the shelf.

I don't know if we are there just yet. Seems like there needs to be more blood in the water and panic for gold mania.

I am still not sure the oil bubble has completely popped. If you discard the ideas that oil slid because 1) W. said "Lift the Ban." 2) Congress said "We are going to get those speculators."Which is pretty easy...

Then that just leaves oil sliding on decreased demand, why decreased demand?1) $4.00+ Gal Gas and a shit economy killed many summer vacations and killed the U.S. summer driving season. 2) Increased fares and fees combined with route and schedule cut backs and idled planes for airlines.3) Weak dollar and soft economy generally just being a wet blanket.4) To some degree China has been steady idling and limiting cars and factories at an increasing percentage in hopes of the air cleaning up before the Olympics for the last month maybe two.

That is all fine and good, China what ever the effect is temporary. Same with the summer.

We are coming up on fall and winter soon. Demand will rise for heating oil and I think oil will creep (or shoot) back up.

You can curtail your driving and flights all you want, in the winter you can only turn the thermostat down so much.

As for gold, it will probably get above $1000.00 I don't know if he is right about $2000.00. If it does or if you believe it will, then other metals is where you should put your money.If gold is at $2000.00 you can bet on two things.1) The government will confiscate yours for the "public good".2) Industry is going to use allot less of it and start figuring out ways to use cheaper metals in it's place.

It might not get to mania, but everything swings too high and then swings too low.

Gold is simply a proxy for inflation and the dollar dropping in value.

If you think deflation is going to happen (in areas other than houses and stocks) then Gold is obviously a bubble.

If you think inflation is where we are going then Gold is still reasonably priced.

If you think hyperinflation in the US is an option, than Gold is really cheap.

Of course given US history if you suspect hyperinflation has any chance of occurring you aren't going to be holding gold in the US, since the government will just steal it and give you some losing value by the minute paper. You'd keep it in a free country, which doesn't have a history of the big-daddy government confiscating private assets...

Industry is going to use a lot less of it and start figuring out ways to use cheaper metals in it's place.

"Industry" doesn't use much gold now. All told things like teeth, electronics, etc. are less than 15% of annual production. Jewelry (hardly an essential use) is fully 70%. The rest of the demand is for "investment"; yep, investment demand is 66% higher than industrial!

This demand picture has been true for decades; I think it's safe to say that there's enough gold in the hands of investors to meet industrial demand for a century even if mine production went to zero.

It sure will see a mania stage. Exhibit A: 1979-1980. We're at about 1975 right now.

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We're in a far, far different situation now, though. The government has lost control but continues in its absurd, self-destructive plans to pour more gasoline on after having lit its own house on fire...more fake money and credit to bail out banks that failed because too much fake money and credit were created! Banks ARE failing. BIG banks, plus two "Government Sponsored Enterprises" (Fannie Mae and Freddie Mac) that have more than half of the country's mortgages. The US is essentially involvent, but the powers that be are working desperately to hide that fact, even though they CAN'T hide it from anyone who is paying attention.

Our country's finances are royally screwed. Any semi-literate person who bothers to look at reality can see this.

No matter what anyone says or does, gold WILL climb much, much higher than current levels. It will do so in fits and spurts, with plenty of pullbacks (buying opportunies) between fresh legs upward.

I believe gold will be higher~over1,000oz this time next year. And it will stick.

A little story....

I was at the bank a few weeks back, talking with an account executive, we starting discussing the economy. I mentioned gold as an investment in these times and he just replied there was nothing to invest money in right now...

Relatives mostly think buying gold is very scary - (must have been burnt in the last gold bull market) even gold stocks scare them.

I have been seeing local commercials and internet gold buying companies advertising they buy broken gold. This did not exist two years ago. Around town, a couple of jewelry stores advertising they buy gold.

The masses are asleep...for now. I really don't see a mania in gold for at least another a few years.

Easy, make a call to the local swat and dhs team. They go into the etf funds NY office with a warrant. There is the gold! They grab the fund manager by the neck and haul out the gold into a large black truck. Then they drop bags with dollars into the vault and one bonus bag for bathroom. They then pick up the phone and call Ben. Ben, you can print now? Hangs up. They put the fund manager down and leave.

Gold has no potential for growth whatsoever, however troubled monetary and financial system has plenty of potential to a relative decline.

Given massive deficit, derivative plays and fundamental problems in the US economy, in pure US dollar terms, gold will probably overshoot $10,000 before pulling back to $3000 - $4000 (which will be new $250 back from the '90). If you think, this is funny, it's not.

It's amazing how people tend to cling to positive outlook in the mid term.

Long term we will have sound economy and a strong dollar (or whatever). However, that day is nowhere near.

If you read this post in 2015 for example, all of this will be very easy to see in retrospect.

It doesn't take crystal ball or a genius to see that currencies not (at least in part) backed with gold will suffer greatly from nearly 40 years of maniacal credit expansion.

Given all of this is very political, gold will be very volatile, but long term will simply stay the course of impartial observer of greed.

Gold is not money, but it does look at it from the orbit, whereas the rest of 'financial instruments' are crawling in the dust biting each other. That game has nowhere to go because it can't beat laws of nature....